Consider an economy with the following income distribution: each person in the bottom quartile of the income
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(a) What is the Gini coefficient associated with this income distribution?
(b) Suppose the bottom quartile pays no taxes, the middle two quartiles pay 10 percent of its income in taxes, and the top quartile pays 28 percent of its income in taxes. Two-thirds of all tax money is redistributed equally to all citizens in the form of military defense, government pensions (social security), roads/highways, etc. The remaining one-third of tax money is disturbed entirely to the poorest quartile. What is the Gini coefficient associated with this redistribution plan? Would you consider this tax and redistribution plan to be a particularly aggressive income redistribution policy?
Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
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